Tax debt of $59,413.28 reduced by Correctly Filing Tax Return


An independent contractor reached out to us because he had a high balance with the IRS and didn’t know how to fix his problem or where to begin. The IRS was threatening to garnish his bank account. He felt the tax debt was due to not having made estimated tax payments.


The tax investigation began once we assigned the case to our tax team, and our enrolled agent received the signed power of attorney. We requested a stay of enforcement to place a hold on any collection action taking place. We requested the client’s master file which was carefully reviewed, and it was determined that the client had a current balance of $59,413.28 for tax years 2011, 2012, 2014, 2015 and 2016.

For the tax year 2011, the IRS filed an SFR (Substitute for Return) and there was an amount due of over $16K for this year only. This means the IRS had filed the 2011 tax return on behalf of the client since he never filed it. It’s important to understand that once the IRS files an SFR, they don’t take into account any exemptions, credits or deductions which will most likely result in a tax liability.

After doing a thorough review it was determined by our tax professional that by filing our own 2011 tax return, the debt of $16,699 would be zeroed out. The customer’s Substitute For Return was filed using the least in credits and deductions as possible, meaning his balance was overstated. Claiming the correct credits and deductions could reduce his balance due if he had records of his self-employment expenses.


The customer decided to move forward with the compliance phase. We prepared the required forms and schedules for 2011. Luckily, he had saved records of all his business expenses and provided them to us. We made sure to use all allowable deductions on the return so that he would legally be liable for the lowest amount of tax. After we filed the 2011 tax return, the total tax balance including penalties and interest was $0.00. We were able to reduce his total balance for 2011 by $16,699. With an accurate balance posted, we continued to work on the investigation and reviewed his financials for the pending balances. Due to client’s income versus expenses, It was determined an Installment Agreement will be his best resolution.


He was thrilled with his debt reduction of $16,699 and decided to move forward with the resolution recommendation of an Installment Agreement. His financial status indicated he was able to afford the proposed monthly payment, so we proceeded to contact the IRS and set up the agreement with monthly payments of $395.00. Collection activity was stopped on the customer’s account since a resolution was in place and he is more than happy to pay off the rest of the balance in comfortable monthly payments.

Total amount owed: $59,413.28
Amount after we fixed the tax return for 2011: $42,714.28
Resolution: File original 2011 tax return & Installment Agreement
Phases worked: Investigation, Compliance & Resolution

More Tax Debt Relief Issues & Solutions.


This example is an actual example of a client who enrolled in the tax program. Every case is unique and this is not an extension that you will receive the same resolution as they will. Your situation is unique, as are all tax cases. The team has extensive experience, has former IRS employees, special officers, enrolled agents, tax attorneys, and CPAs. Our tax team will work diligently with a flat fee to solve the tax issue you have for the best possible resolution for you. That means doing all possible to ensure you pay the lowest amount of taxes legally required based on your situation, allowable deductions, finances, and other factors.

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